The thirteen billion dollar blunder


It appears that the PML-N government is either unwilling or incapable of learning from past errors. The decision to sign a Long Term Sale agreement (LSA) with Qatar is egregious and exposes Pakistan to exactly the same risks that the Benazir government affected when she signed the IPP contracts in 1994 under the advice of USAID, the World Bank and the Asian Development Bank. It seems that the avarice of our rulers remains unchanged.

At that time, in 1994, the price of oil was $18/barrel and the rupee was at 28/$. The agreed price of furnace oil was fixed at Rs5,000/tonne with any escalation as a pass through item giving an electricity unit rate at Rs1.8/unit. By 2007 the price of oil was $120/barrel and the rupee was 100/$, the price of furnace oil increased fifteen fold to Rs75,000/tonne and price of electricity shot to Rs20/unit. As this was affordable to most Pakistanis it led to the government subsidizing it – resulting in the infamous circular debt and pernicious load shedding.

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